Edited by L. Randall Wray and Mathew Forstater
Chapter 9: Economic Policy of Sustainable Development in the Countries of Transition Towards a Market Economy
Rumen V. Gechev During the 1980s, Council for Mutual Economic Assistance (COMECON) economies entered the stage of irreversible economic degradation. All extensive factors of production were exhausted. The level of productivity remained far below the productivity of the developed countries. The standard of living was deteriorating. Even the massive foreign credits did not help and just prolonged the agony of the so-called command economy on the expense of mounting foreign debt, deepening ﬁnancial and economic disproportions, and increased dependence on import of consumer goods. Abolition of the old system and establishment of modern market economy was a great challenge for the people in Eastern Europe. They had to go through a unique process of transformation at a time of worsening internal and external economic conditions, difﬁcult and contradictive political democratization, and ideological prejudices. The most complicated problem was the development of such a model of transition which could minimize its economic and social price. Despite the many similarities, every country from the region had to apply nationally adapted or modiﬁed reform mechanisms. Three main factors have determined the outcome of the reforms: complexity, consistency and dynamics. Today, most of the main objectives are fulﬁlled but at a different cost. There is a common understanding that a universal model of transition towards market economy does not exist. Some common principles are observed, including privatization, trade liberalization, general economic restructuring, monetary reforms, political pluralism and others, but the concrete mechanisms of implementation have to be different. These different models...
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